In commerce, there are numerous ways for buyers and sellers to exchange money for goods and services. One commonly used conventional method is that a buyer pays cash to a seller. There are several problems with this payment method. First, if a transaction is large, it would be hard for both the buyer and seller to handle a large amount of cash, for example for transactions over a few thousand dollars. Besides the need to provide exact changes, doing transactions in cash would require more efforts in book keeping for both buyers and sellers. In addition, the parties may be exposed to the risk of counterfeiting as well as theft or robbery.
Another commonly used conventional method is that the buyer writes a check to the seller. However, this method of payment also has several drawbacks. First, it is inconvenient for the buyer to carry a check around, and it is also inconvenient for the seller to deposit the check to a bank every time he receives a check. In addition, the buyer may be concerned with the risk of lost checks and the seller may be exposed to the risk of counterfeit checks. If a check has bounced, which means insufficient fund in the buyer's bank, it may cost additional money and effort for both the buyer and seller to fix the problem.
Yet another commonly used conventional method is that the buyer pays with a credit or debit card. However, there are numerous problems associated with this payment method. To the buyer, it is inconvenient to carry multiple cards and many merchants do not accept credit cards if the transaction amount is relatively small, such as less than $20. In addition, if the credit cards are lost or stolen, it would cause stress and effort for the card holder to inform the issuing bank and have the cards replaced, and it would cost the issuing bank to create and mail a replacement card to the card holder. Furthermore, the credit/debit card numbers are static, which do not change within their corresponding expiration dates. Such static card numbers may be stolen during online transactions without card owner's knowledge. Furthermore, a record breach at merchant sites or at issuing banks would create tremendous financial risks to the card holders, merchants, and/or the issuing banks.
Therefore, there is a need for systems and methods that can address the problems of the conventional payment methods and assist buyers and sellers doing transactions in electronic commerce.